Reserve managers prioritise liquidity tranches during pandemic

Central banks increased this part of their portfolios in the wake of US Treasury disruptions

Reserve managers have increased the size of their liquidity buffers over the last year, according to the Reserve Benchmarks 2021.

The allocation to these tranches rose on average from 34.0% to 42.7% across the 46 central banks providing information on their approach to tranching. 

During the onset of the pandemic, US Treasury markets experienced major disruptions. In March 2020, investors started to abandon Treasuries to secure dollars in what it came to be known as ‘dash for cash’. The crisis

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